Sulfide electrolyte (SE)-based all-solid-state lithium batteries (ASSLBs) have gained worldwide attention because of their instrinsic safety and higher energy density over conventional lithium-ion batteries (LIBs). However, poor air stability of SEs, detrimental interfacial reactions, insufficient solid–solid ionic contact, and the large gap between fundamental study and practical engineering have impeded the commercialization of SE-based ASSLBs. This review aims to combine fundamental and engineering perspectives to rationally design practical SE-based ASSLBs with high energy density, covering SEs, interface, and practical all-solid-state pouch cells. First, the latest progress of typical pseudo-binary, pseudo-ternary, and pseudo-quaternary SEs is summarized, and effective strategies to improve ionic conductivity and chemical and electrochemical stability are highlighted. Moreover, challenges and strategies at the cathode and anode interfaces are reviewed separately. Furthermore, advanced in situ characterization techniques are examined to better understand the interface of ASSLBs. Encouraging demonstrations of SE-based all-solid-state lithium-ion and all-solid-state lithium–sulfur batteries are exemplified. Most importantly, energy-density-oriented all-solid-state pouch cells are designed using practical engineering parameters. The proposed design can serve as a quantitative framework to predict the practical energy density of SE-based all-solid-state pouch cells in future. Finally, future directions and our perspectives in SE-based ASSLBs are presented.